Good Afternoon Can you please assist me again with my discussion?


Question Description:

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Good Afternoon Can you please assist me again with my discussion? Accounting for Merchandising Businesses Computers have become a staple in the lives of most people. There are many companies that provide computers on the market. Assume that you are planning to purchase a new laptop for your classes, work and home use. Please go to the websites of two major United States computer manufacturers such as Hewlett Packard®, Acer®, Apple®, etc. and make a selection. Once you have made your selection, please complete the following items and questions: 1) Compare the following items for your selections: Price Delivery Charges Financing Options Discounts Coupons Warranties Installation Offered Recycling of Old Components Offered 2) What are some factors that can impact the gross profit of a merchandise company? 3) One item that can help investors understand the relationship between net sales and net profits is the gross profit rate. The calculation explanation for this financial ratio is found on page 225 of the textbook. Find the financial information needed to calculate the gross profit rate for your two selected companies. Which company has the better ratio? Why do you think this is the case? Please use the most recent annual report available. Also, make sure to use the same year’s annual report for your companies. ch5ppt.pdf 5-1 5 Accounting for Merchandising Operations Learning Objectives 1 2 Record purchases under a perpetual inventory system. 3 Record sales under a perpetual inventory system. 4 Apply the steps in the accounting cycle to a merchandising company. 5 5-2 Describe merchandising operations and inventory systems. Compare a multiple-step with a single-step income statement. LEARNING OBJECTIVE 1 Describe merchandising operations and inventory systems. Merchandising Companies Buy and Sell Goods Retailer Wholesaler Consumer The primary source of revenues is referred to as sales revenue or sales. 5-3 LO 1 Merchandising Operations Income Measurement Sales Revenue Less Cost of Goods Sold Not used in a Service business. Equals Cost of goods sold is the total cost of merchandise sold during the period. 5-4 Gross Profit Illustration 5-1 Income measurement process for a merchandising company Less Operating Expenses Equals Net Income (Loss) LO 1 Operating Cycles The operating Illustration 5-2 cycle of a merchandising company ordinarily is longer than that of a service company. Illustration 5-3 5-5 LO 1 Flow of Costs Illustration 5-4 Companies use either a perpetual inventory system or a periodic inventory system to account for inventory. 5-6 LO 1 Flow of Costs PERPETUAL SYSTEM Records continuously show inventory that should be on hand for every item. 5-7 Maintain detailed records of the cost of each inventory purchase and sale. Company determines cost of goods sold each time a sale occurs. LO 1 Flow of Costs PERIODIC SYSTEM Do not keep detailed records of the goods on hand. Cost of goods sold determined by count at the end of the accounting period. Calculation of Cost of Goods Sold: Beginning inventory Add: Purchases, net Goods available for sale Less: Ending inventory Cost of goods sold 5-8 $ 100,000 800,000 900,000 125,000 $ 775,000 LO 1 Flow of Costs ADVANTAGES OF THE PERPETUAL SYSTEM Traditionally used for merchandise with high unit values. Shows the quantity and cost of the inventory that should be on hand at any time. Provides better control over inventories than a periodic system. 5-9 LO 1 5-10 LO 1 DO IT! 1 Merchandising Operations and Inventory Systems Indicate whether the following statements are true or false. 1. The primary source of revenue for a merchandising company results from performing services for customers. 2. The operating cycle of a service company is usually shorter than that of a merchandising company. True 3. Sales revenue less cost of goods sold equals gross profit. True 4. Ending inventory plus the cost of goods purchased equals cost of goods available for sale. 5-1

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